LOAN MODIFICATION AND WHEN IT MIGHT BE THE RIGHT APPROACH FOR YOU
Anyone paying off a large, long-term loan—typically on a home—can find themselves struggling to make those monthly payments. For instance, you might have had a well-paying job when you signed the papers and now you're searching for a new position after an unexpected layoff.
When hardship occurs, one possible response is a loan modification. That's when you, as the borrower, go back to the lender and try to get the terms of the loan changed to your advantage. That could mean reducing the interest rate or perhaps locking in a lower fixed rate on a variable rate loan that has ballooned.
But why would a lender voluntarily change terms in any way that's more favorable to you—and less favorable to them?
Simple. It's often in their best interest to keep the home loan alive. If they call it in, they'll spend a great deal of time and expense to foreclose on your home, get you out of it, prepare it for resale and sell it again. So if they can work with you, they often will.
The decision to make a loan modification is up to the lender. Some will be more motivated than others. Some might be very receptive while others refuse your request outright. And the modified terms offered might be all over the board. That's why it's critical that you first contact a loan modification attorney Las Vegas who has experience dealing with lenders and crafting effective agreements.
You'll generally have to show hardship to qualify for modification. That could mean job loss, high medical expenses, the death of an income-generating spouse or similar sudden adversity.
And, while your chances might improve if you've missed a few months' payments, you won't qualify if the lender thinks that you deliberately missed those payments for strategic reasons. So make sure you've made sincere efforts to stay current.
THE RIGHT OPTION?
There are potential downsides. For one thing, a modification for hardship could ding your credit rating (though not as much as a foreclosure, and your credit report might already show a few dents and dings by the time you need modification).
Also, the terms might make your payments easier now, but create challenges in the longer term. For instance, if your monthly payments are cut dramatically because the life of your loan has been extended, your total payments will increase.
That's not necessarily a bad thing—just something you should know before signing anything. So first make an appointment with Vohwinkel & Associates. Your experienced loan modification attorney Las Vegas might be able to help you approach your lender, qualify for modification and establish terms that will enable you to save your home. But call us immediately.